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Vornado (VNO) Ups Flexibility With $3.2B Refinancing, Asset Sale

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To boost flexibility and strengthen its balance-sheet position, Vornado Realty Trust (VNO - Free Report) recently concluded four refinancings for an aggregate value of $3.2 billion. Such moves also support its expansionary endeavors.

On Jun 30, 2022, Vornado fully extended the maturity on one of its two unsecured revolving credit facilities from March 2024 to December 2027. The other $1.25 billion facility will be maturing in April 2026.

On the same date, VNO also increased the maturity date of its $800 million unsecured term loan from February 2024 to December 2027. Of the $800 million loan, $750 million has been swapped to a fixed rate of 4.05% through October 2023 under an existing swap agreement.

With the refinancing, Vornado extended the maturities of the debt. This strategy will help it improve its maturity profile and enjoy greater liquidity for day-to-day operations.

Further, on Jun 28, VNO completed a $700 million refinancing of 770 Broadway. The maturity has been fully extended by five years to July 2027. Moreover, on Jun 15, a $480 million refinancing of 100 West 33rd Street was carried out. The current interest-only loan through March 2024 for this 1.1 million square feet property will be maturing in June 2027 and can be extended twice by one year, subject to debt service coverage ratio and loan to value tests.

These efforts will also boost Vornado’s cash flow and alleviate bottom-line pressure. As of Mar 31, 2022, Vornado had $3.9 billion of liquidity, consisting of $1.1 billion of cash and cash equivalents, $645 million of investments in U.S. Treasury bills and restricted cash.

Vornado also focuses on improving its core business and undertakes opportunistic developments and divestitures in addition to business spin-offs. Strategic sell-outs provide the company with the dry powder to reinvest in opportunistic developments and redevelopments.

Simultaneously with its refinancing move, Vornado announced that it has completed the earlier announced divesture of Center Building, located at 33-00 Northern Boulevard in Long Island City, NY, for an aggregate sale price of $172.8 million. It expects to lock in a financial statement gain of $15 million in second-quarter 2022.

However, analysts seem bearish on this Zacks Rank #4 (Sell) stock. The recent estimate revision trend for 2022 funds from operations (FFO) per share does not indicate a favorable outlook for the company, with estimates moving downward.

Shares of VNO have lost 27.8% compared with the industry’s decline of 15.8% over the past three months.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are Host Hotels & Resorts (HST - Free Report) , OUTFRONT Media (OUT - Free Report) and Pebblebrook Hotel Trust (PEB - Free Report) .

The Zacks Consensus Estimate for Host Hotels’ 2022 FFO per share has moved 1.2% upward in the past month to $1.65. HST presently carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OUTFRONT Media’s ongoing year’s FFO per share has been raised 1.5% over the past two months to $2.09. OUT carries a Zacks Rank #2 (Buy), currently.

The Zacks Consensus Estimate for Pebblebrook Hotel’s current-year FFO per share has moved 2.9% northward in the past month to $1.80. PEB carries a Zacks Rank of 1 at present.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.